The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XI. The security collateral loan market

Collection:: Economics Books

202 THE WORK OF THE STOCK EXCHANGE The war period of 1917-19, which changed so many finan- cial customs and practices everywhere, made its peculiar exi- gencies felt inside Wall Street security loan envelopes. While during these years the railroad business was hazardous and unprofitable, the enormous production inaugurated by the war imparted great strength to many industrial shares. Thus the “regular loan” came during this period to consist of rail and industrial shares in about equal proportions. Likewise, the rise of industrial shares in comparative merit and activity gave rise to more “all-industrial” loans, previously thought a rather hazardous type. ALL-INDUSTRIAL LoaN or $100,000 Based entirely on industrial stocks. Margin 30% 300 General Motors at 72........... 300 Pan American Petroleum at 59..... 300 Liggett & Meyers at 8s.... 200 Crucible Steel at g2...... 100 Sears-Roebuck at 155......... 100 American Telephone & Telegraph at 207............ 100 Anaconda Copper at 106. . reeves 1.400 $ 21,600 17,700 25,500 18,400 15,500 20,700 10.600 $130.000 Since the war, the “all-rail” loan has become very rare, and the “all-industrial” loan the commonest of all types. It is also ‘rue that in many loans, bonds are introduced, and some loans are made entirely on bond cellateral. To the lender on securities, the quality and price-stability ©f the collateral are naturally important, and he may refuse to accept issues which he considers weak or overpriced, either altogether or unless unusually heavy margins are provided. But both by demanding high margins and by pricing collateral below market prices to suit himself, the lender can in practice protect himself very completely even when lending upon thoroughly speculative securities whose price fluctuations may be great. Therefore to the lender marketability is highly essen- tial, since to protect his loan he must be able to sell the collat- eral speedily. This is the reason why a lender will sometimes

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